Country's largest software exporter, Tata Consultancy Services is increasing its billing rates for existing contracts, up for renewal, by 3-5 per cent while for fresh contracts the rates will be higher by 5-10 per cent, company CEO S Ramadorai said on Friday.
TCS shares were trading at 0.62 per cent up at Rs 1151.25. "If there is an opportunity to increase the billing rates in the existing contracts, we will do so. In fact in all contracts (existing), there is contractual clause to renegotiate the rates when it is up for renewal. When there are fresh new contracts and competency is involved and
customer is willing to pay for the expertise, we will raise the rates. For existing contracts up for renewal, we will raise the rates by 3-5 per cent and for new ones, the hike will be 5-10 per cent", the Ramadorai said.
The move, depending the on the nature of the contract, will have an impact on its topline. TCS, which recently bagged a $100 million outsourcing deal from US based healthcare major Kimberley Clarke, is reported to be close to bagging a multi-million dollar deal from IMF. Ramadorai declined to comment on this.
TCS also bagged a deal from Eli Lilly to establish Medical Information Sciences Centre in India to advance Lilly's clinical research and development. The deal is believed to a multi-year engagement, worth $35 million.
Before that the Tata group company had won $90 million Qantas, the Australian Airlines engagement. It is a seven-year deal and the largest ever for an Indian IT company in Australia. Satyam was also a winner of this contract along with TCS.
In one of the largest ever outsourcing deal last year, TCS had won a contract from ABN Amro. Infosys had also won part of the 1.8 billion Euro contract.
In Q2 ended September, TCS had a profitable growth quarter driven by strong international demand, an increasing number of large customers as well as a healthy addition of 58 new accounts. "There is tremendous scope for continuing our share of wallet, with our top 50 customers using our full-services model, the company had said.
In Q2, in a strong demand environment, the company had improved its margins by over 300 basis points by ensuring revenue growth matches with the profitability benchmarks.
Moreover, margins have been boosted as large contracts announced earlier have transitioned into the off-shore mode."
The company's integrated full-services model, including business intelligence, consulting, infrastructure and assurance services, is driving growth with large customers leading to a 50 per cent jump in the number of customers with over $50 million in annual revenues to 15 during Q2.
In Q2, the company had a total revenue at Rs 4,495 crore ($978 million) up 42.43 per cent Y-on-Y. While its net profit was up at Rs 1,019 crore ($222 million) up 43.37 per cent Y-on-Y. EBIDTA margins improved by 305 basis points in Q2 to 27.84 per cent.
